DYNAMIC PRICE AND LEAD TIME QUOTATION UNDER SEMICONDUCTOR INDUSTRY RELATED CHALLENGES

We consider the dynamic price and lead time quotation problem in the practical context of the semiconductor industry. Our model considers an inventory decoupled supply chain and accounts for a limited capacity, stochastic demand and processing times and quote-sensitive customers. We focus on performance evaluation under two decision making strategies. The first is lead time based pricing (LTBP). It follows a sequential approach where the firm decides first on the lead time quote (manufacturing) and then quotes the price under the given lead time (marketing). The second strategy suggests determining the lead time and the price quotes simultaneously. From the practical view-point, it is interesting to first understand the system performance under LTBP and then look for the ways to realize it. Based on our numerical results, we elaborate on the effect of LTBP on the key performance indicators and discuss conditions for close performance to a simultaneous decision strategy.